Public procurement bill: to control graft or counter charges?

The bill has not been able to walk the extra mile for ensuring transparency, competition and efficiency in the public procurement process


Manoj Kumar | April 13, 2012

Transparency in governance and reigning in graft is at the core of the Public procurement Bill 2012 (“Procurement Bill”) cleared by the Cabinet on 12th April 2012. The Procurement Bill seeks to bring in high degree of transparency, competition and efficiency in the public procurement process alongside ensuring
fair and equitable treatment to bidders.

Does the Procurement Bill go as far to achieve the aforesaid and what else is still left wanting. Is the Bill genuinely structured to beat the ills of graft and lack of transparency, presently plaguing the public procurement process or has the Bill caught the attention of the Cabinet only as a response to the multitude of graft cases concerning various departments.

Some of the important features of the Procurement Bill are as follows:
- The provisions set out in the Procurement Bill shall apply to all departments of the Central Government, Central PSUs, companies where Central Government owns more than 50% shares, all bodies set up under the Constitution of India or under any Central Law and all bodies whose expenditure is met from the Consolidated fund of India;
- The Central Government may notify any other entities as well to come within the purview of the procurement Bill;
- The procuring entity (as above) shall follow the following basic principles:
(i) ensure efficiency, economy and transparency;
(ii) provide fair and equitable treatment to bidders;
(iii) promote competition;
(iv) put in place mechanisms to prevent corrupt practices
- The Procuring Entity shall first define the need and scope of item of procurement & terms of the tender before initiating any procurement process;
-The Central Government my provide mandatory procurement only from a specified category of bidders on grounds of promoting domestic industry, socio-economic policy of the Government and any other consideration in Public Interest;
- Additionally, the central Government may impose and enforce any limitations on participations in the procurement process on grounds of:
(i) protecting public order, morality or safety,
(ii) protecting human, animal or plant life or their health,
(iii) protecting intellectual property, and
(iv) protecting the essential security and strategic interest of India.
- The Documents & Records of the procuring Entity relating to the procurement process shall be subject to the RTI Act, 2005;
- The Procurement Bill lays down a ‘code of integrity’ which is mandatory for all officials of the Procuring Entity and a bidder;
- The Procurement Bill provides for the following methods of procurement by the Procuring Entity:
(i) open competitive bidding;
(ii) restricted bidding;
(iii) two-stage bidding;
(iv) single source procurement;
(v) electronic reverse auctions;
(vi) request for quotations;
(vii) spot purchases;
(viii) any other method notified by the Central Government
- Grievance redressal to be at the doorstep of the Procuring Entity and the committee set up in this behalf by the procuring Entity;

The Procurement Bill appears to be a half cooked broth hurriedly being served to meet the growing intolerance on graft issues. This is evident from the wide range of issues (numbering 30) earmarked for the Central Government to make Rules on, since the Procurement Bill in its present form leaves most of the said issues still vague and unclear in scope.

The compliance of ‘code of integrity’ during the procurement process (in its present form) is also capable of being tweeked with since presenting the same is only applicable on the officials of the procuring entity, whereas actually, it may be there could be other public servants of the departments concerned also having a role or influence on the process, who are not bound by the ‘code of integrity’.

Further, while a bidder can be blacklisted for breach of code of integrity, the Procurement Bill is silent on the consequences of breach of the said ‘code of integrity’ by any official of the procuring entity.

The permitted methods of procurement listed above include various methods which have since been tainted with allegation of lack of transparency and graft. Vague methods like single source procurement or spot purchases need a lot more transparency and oversight, which is presently lacking.

The Procurement Bill also does not cover consulting services, which is a critical area requiring high degree of transparency and oversight to control discretion driven graft and to bring in efficiency in procurement of consulting services.

What is needed is an umpire like entity (similar in context to the election commission in India) which can assume jurisdiction during the currency of a procurement process and is outside the space of influence of ant procuring entity / Central Government – to respond to and deal with issues concerning
transparency, competition and efficiency in the public procurement process alongside ensuring fair and equitable treatment to bidders and other stakeholders. Various Countries have a similar model already in place i.e France (General Directorate for Competition Policy, Consumer Affairs and Fraud
Control (DGCCRF)), Switzerland (Purchasing Commission of the Federal Government (BKB)) etc.

While the procurement Bill is a progressive step in its spirit, it has not been able to go the last mile for ensuring transparency, competition and efficiency in the public procurement process alongside ensuring fair and equitable treatment to bidders in the procurement process. A lot more comprehensive module
of detailed procedures and rules needs to form an integral part of the Procurement Bill itself to ensure an ernest attempt to achieve the goals and objectives driving the said Bill.




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